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Bridge Environment seeks to catalyze a cultural shift in how our society addresses environmental issues. We provide relevant and unbiased advice to any interested party, and also work to educate scientists, policy makers, and the public on how to have a more informative dialog over environmental issues.

Thursday, March 21, 2013

Catch shares, part 1: them’s fighting words

Catch shares, also referred to as individual quotas, are a system that
assigns percentages of each year’s annual catch quota to individual fishermen
or fishing companies. The concept has slowly been gaining traction in fishery
management circles, though it still remains highly controversial. Some advocate
catch shares a wonder tool to address all fisheries ills. Others oppose them on
purely ideological grounds. In a two-part blog entry, we will discuss what catch
shares can and cannot do. This week, we will discuss common fisheries problems
and the potential for catch shares to help. Next week we will consider them the
way that every management tool should be, in the context of a full fisheries
management toolbox.

Economists like
to talk about programs like catch shares as a property right, which has led to
the impression that catch shares are tantamount to the public giving up control
of the fishery. In reality, a catch share entitles a fisherman to ownership
over a portion of current and future catches, but ownership of the fish
population and responsibility for setting quotas remains with the public. As
Dan Pauly pointed
out over 15 years ago, people have negative reactions to the concept of
catch shares because of various assumptions, among them that catch shares are
part of a right-wing conspiracy to give the ocean away to big corporations or
that this sort of system will lead to the concentration of a fishery into the
hands of a privileged few while leaving most high and dry. These assumptions
are still widespread today and are major themes of a recent article on catch
shares by Suzanne Rust. Next week, I promise to come back to them.

Let’s first talk
about why catch shares, or property rights in general, are at issue. In short,
economic evidence and common sense dictate that people take better care of
things they own than things that are common property. To describe this
phenomenon, Garrett Hardin coined the term “tragedy of the commons” in an article of that
name published in 1968, although similar ideas were espoused by H. Scott Gordon back
in 1954. The idea that property rights matter to the state of public resources actually
stretches much farther back. There was a political movement that began in late
18th Century England aimed at dividing and privatizing public farming
areas, known as commons. Data suggested that enclosing an area would increase
its value, although thoughtful
analysis published in 1998 by Gregory Clark would suggest that those gains
were modest and mostly offset by the costs of building fences. In fisheries,
the tragedy has three potential consequences, and catch shares can reduce or
eliminate them if certain conditions are met.

Potential consequence #1: In a fishery
without catch shares, competition for a bigger slice of the quota can lead to
inefficiencies. This leads to a phenomenon known as the race for fish. Under
these conditions, fishing operations may race to catch as much fish as possible
before the fleet collectively meets the annual quota. As a result, a fishing
fleet develops that is too big with too much fishing capacity, too few safety
standards, and delivering a product en masse so that prices are low and supply
only available for a short season.

Necessary
conditions: In order for catch shares to address this consequence, there
must be an established annual catch limit but no allocation of that among
vessels. This condition is very different from the ones that motivate catch
shares as a solution for the other two consequences.

An example:
Catch shares have been used effectively in Alaska as detailed in a 2012 paper
by Keith Criddle (see his homepage for
details on several related projects). Previously, Pacific halibut fishing
operations would race to catch as many fish as quickly as possible because the
fishery closed when the annual quota was hit. As a result, there were too many
boats fishing too intensively and recklessly. When this fishery switched to catch
shares, the pace of fishing slowed dramatically. Now, fewer boats catch higher
quality halibut and with far fewer accidents.

Potential consequence #2: An open
access fishery can be unprofitable. Gordon’s 1954 paper on the tragedy of the
commons elegantly lays out the logic behind this idea, and how property rights
may help. When a fishery is open to anyone and healthy enough that it is
profitable to fish, we can expect heavier fishing by existing operations and
new entry by others seeking a share of the profits. The collective increase in
fishing pressure will drive down the fish stock until it is no longer
profitable for anyone. Thought of another way, the incentive to conserve is
negated because anyone making a sacrifice today cannot be sure they will receive
the resulting benefits tomorrow. Thus, people face economic incentives to
heavily fish open access fisheries, to the detriment of the fish stock, their
neighbors, and themselves. Catch shares change this dynamic in two important
ways. First, they prevent new entrants. Second, they change the incentives for
existing fishing operations. Because a catch share applies to the current and
future fishing years, there is now incentive to conserve. This point is subtle.
It is not in anyone’s interest to unilaterally make sacrifices, either by
fishing below their quota or even passing up opportunities to catch more than
their share. However, catch shares do give owners the incentive to collectively
lobby for a quota that would allow for an overfished stock to rebuild.
Conservation interests have taken note of this point and, in many cases, are
the driving force behind the implementation of catch shares in fisheries today.
Their hope is that catch shares will change the incentives of fishing
operations towards more abundant fish stocks.

Necessary
conditions: Here we have a couple of outstanding issues. First, let’s
examine the concept of unprofitability. It’s not as bad as it sounds. Remember
from the theory that people will stop entering the fishery when it’s not worth
their while to do so. Since entering requires some investment in terms of a
boat, fishing gear, permitting, and fuel, not to mention time and energy, we
need to consider someone who is choosing between fishing and an alternate use
of their money and time. The zero profit condition still allows someone to be
paid for their time and investment. Zero profit simply means they will get the
going rate. Second, other management measures matter, but we will cover this
next week.

An example:
Chile has a growing history of
conservation-minded coastal management that has resulted from granting
communities exclusive access to their local fishing grounds. I did a small
project in Chile in the late 1990s when this program was still new and
communities were already celebrating the exclusive access by adopting highly
restrictive regulations for themselves. My favorite dive during that project
was in an area that decided it would only allow a single day of fishing each
year for the highly prized loco, an abalone-like snail. In short, in response
to having control over their local marine resources, Chileans have adopted
plans that include short-term sacrifices which have resulted in long-term
benefits.

Potential consequence #3: When stocks
are driven down to unprofitable levels, they are depleted well below natural
levels, and brings up two conservation concerns: loss of ecological functions
and, in extreme cases, risk of local extinction. These conservation concerns
have led to the coalition that is currently increasing the use of catch shares
in fisheries. They are also the most controversial.

Next week we
will discuss necessary conditions, because they are intimately tied to other
tools in the fisheries toolbox.